Hampton v. Taylor, 94-438

• Decision Date: 05 December 1994
• Docket Number: No. 94-438,94-438
• Parties: Timothy O. HAMPTON, Appellant, v. Donna TAYLOR, Appellee.
• Court: Arkansas Supreme Court

Page 535

887 S.W.2d 535

318 Ark. 771

Timothy O. HAMPTON, Appellant, v. Donna TAYLOR, Appellee.

No. 94-438.

Supreme Court of Arkansas.

Dec. 5, 1994.

J.G. Molleston, Magnolia, for appellant.

William I. Prewett, El Dorado, for appellee.

HOLT, Chief Justice.

This is an appeal from a summary judgment in favor of the appellee, Donna Taylor. The appellant, Timothy O. Hampton, a former stockholder and officer of GCP, Inc., filed suit against Ms. Taylor, a secretary and bookkeeper for GCP, Inc., alleging that she had made fraudulent statements to certain account debtors whose accounts had been assigned as security for a promissory note to the First National Bank of Magnolia, Arkansas, upon which Mr. Hampton was personally liable as a guarantor. Mr. Hampton asserted that Ms. Taylor's alleged misrepresentations caused these account debtors to divert payments from the creditor bank to GCP, Inc., and further resulted in his having to pay the note when it went into default.

The Columbia County Circuit Court granted Ms. Taylor's motion for summary judgment on the basis that the three-year statute of limitations for actions based on misrepresentation, Ark.Code Ann. § 16-56-105 (1987), barred the claim. The circuit court found that Mr. Hampton had acknowledged that the alleged misrepresentation occurred on May 3, 1989, more than three years prior to the filing of the complaint on September 22, 1993.

On appeal, Mr. Hampton argues that the trial court erred in failing to find an issue of material fact with respect to his contentions (1) that Ms. Taylor fraudulently concealed the existence of Mr. Hampton's cause of action, and (2) that the three-year statute of limitations did not begin to run until the occurrence of the last element of the tort charged (pertaining to representations allegedly made to officers or employees of Thermal-Tec of Michigan, Inc.). Neither argument is persuasive. We affirm.

Facts

Appellant Timothy Hampton is a former stockholder and officer of a corporation known as GCP, Inc. On November 23, 1988, he executed a line-of-credit agreement, personally guaranteeing a one-year promissory note owed by GCP, Inc., to the First National Bank of Magnolia, Arkansas. Subsequently, on November 28, 1988, and on March 24, 1989, GCP, Inc., by Mr. Hampton, assigned two debts owed it, respectively, by Thermal-Tec of Michigan, Inc., and Triple T Roofing, Inc., to First National Bank as security for payment of the note that Mr. Hampton had guaranteed. As a result, Mr. Hampton became the beneficiary of the assignments for the purpose of paying the indebtedness guaranteed to First National Bank.

Mr. Hampton sold his 100 shares in GCP, Inc., to the corporation on May 26, 1989. As ratified in a formal agreement between Mr. Hampton and GPC, Inc., the corporation agreed to pay him $9,487.85 in consideration for the stock transfer. The certificate representing the shares was delivered to First National Bank, which acted as escrow agent.

As an additional consideration, GCP, Inc., agreed to assume all of the indebtedness owed to First National Bank under the November 23, 1988 line-of-credit agreement, under which the corporation owed, as of May 19, 1989, the amount of $59,002.50. Further, the agreement recited that:

the Corporation and the Guarantors [stockholders Edwin S. Hall, III, and Gerald E. Taylor, Sr. (no relation to the appellee) ], jointly and severally, do hereby agree to hold Hampton harmless from any liability owed to the said First National Bank pursuant to said line of credit agreement and agree to indemnify him in connection therewith. The Corporation and Guarantors will use their best efforts to have Hampton released from any personal liability for said indebtedness. The Corporation and Guarantors shall also pay to First National Bank any accounts of Hampton Industries which have been assigned to First National Bank pursuant to the aforementioned line of credit agreement and the Corporation and Guarantors do hereby agree to indemnify and hold Hampton harmless from any liability on said accounts receivable.

Provision was made for an installment-payment schedule, and Mr. Hampton agreed to transfer ownership of a tanker trailer to GCP, Inc.

On November 23, 1989, the promissory note guaranteed by Mr. Hampton came due. The note remained unpaid, and, on March 9, 1990, Mr. Hampton received a demand letter from First National Bank of Magnolia, requiring payment of the line-of-credit agreement. At that time, according to an affidavit he filed on April 15, 1993, in support of his response to Ms. Taylor's motion for summary judgment, Mr. Hampton inquired of all account debtors whose accounts had been assigned to First National Bank and discovered that Thermal-Tec of Michigan, Inc., and Triple T Roofing, Inc., had paid their accounts receivable directly to GCP, Inc., rather than to First National Bank. Upon further investigation, Mr. Hampton averred, he was advised by corporate officers of Thermal-Tec and Triple T that appellee Donna Taylor, who at the time was employed as a secretary and bookkeeper for GCP, Inc., had represented that the funds in question should be paid directly to GCP, Inc., instead of to First National Bank because the bank had been paid.

Mr. Hampton declared that, because the Thermal-Tec and Triple T accounts were paid to GCP, Inc., and not applied on the loan, which remained delinquent, he was required to satisfy the conditions of the promissory note and letter-of-credit agreement by paying the sum of $59,002.50 plus accrued interest to First National Bank of Magnolia within thirty days of receipt of the demand letter. Mr. Hampton further stated in his affidavit that, while it was possible that he had some notice that the promissory note and letter-of-credit agreement were in default on or about November 23, 1989, when the note came due, he did not recall any such notice, and the bank's records reflected no such notice. He asserted that the earliest date on which he should have reasonably have known that the accounts had been diverted was November 23, 1989.

To recover his payment on the note, Mr. Hampton, doing business as Hampton Industries, filed a complaint against Ms. Taylor on September 22, 1992, alleging that, on or before November 23, 1989, Ms. Taylor knew or should have known that he was entitled to the benefit of the assigned Thermal-Tec and Triple T accounts and that First National Bank of Magnolia had not been paid the amounts owing pursuant to the assignments. He claimed, further, that Ms. Taylor knowingly misrepresented to officers and employees of Thermal-Tec and Triple T that the amounts owing under the assignments had been paid. Mr. Hampton asserted that, despite his due diligence, he became aware of Ms. Taylor's misrepresentations only on or after November 23, 1989, when, contrary to the agreement between him and GCP, Inc., he was required to pay the promissory note. He alleged that Ms. Taylor had procured the use and benefit of some of the amount represented by the assignments and stated that he was entitled to compensatory damages in the amount of $24,598.50 plus pre- and post-judgment interest and punitive damages.

On December 17, 1992, Ms. Taylor filed a motion for summary judgment, stating that the answers to interrogatories provided by Mr. Hampton indicated that the alleged misrepresentations occurred on April 24, 1989 (as to Thermal-Tec), and May 3, 1989 (as to Triple T). The answers stated that, in both instances, Ms. Taylor had used words to the effect that "The bank has been paid, send payment directly to us." Because, Ms. Taylor asserted, Ark.Code Ann. § 16-56-105 imposes a three-year statute of limitations for actions based on misrepresentation, the action, which was "clearly not supported by any factual basis," was barred.

In his brief in support of his response to the motion for summary judgment, filed, along with his supporting affidavit, on April 15, 1993, Mr. Hampton argued that his factual basis for his complaint was that Ms. Taylor had committed the acts alleged and that he had been damaged in consequence. He urged that the five-year statute of limitations provided for in Ark.Code Ann. § 16-56-111 (1987) should apply because the misrepresentation was "inextricably linked" to the written agreement of May 26, 1989, between Mr. Hampton and GCP, Inc.

The Columbia County Circuit Court entered its order on December 28, 1993, finding, as noted earlier, that Mr. Hampton had acknowledged that Ms. Taylor's alleged misrepresentations were made on May 3, 1989, and that the suit was filed on September 22, 1993, more than three years later, outside the bounds of Ark.Code Ann. § 16-56-105, the statute of limitations for actions based on misrepresentation. Ms. Taylor's motion for summary judgment was granted, and Mr. Hampton's complaint was dismissed. From that judgment, this appeal arises.

Standing

It should be noted at the outset that no argument has been advanced on the question of Mr. Hampton's standing to assert a claim for deceit when the misrepresentations by Ms. Taylor which allegedly harmed him were directed to third parties. We address the issues actually raised by Mr. Hampton and dealt with by the trial court in its findings--i.e., fraudulent concealment and the statute of limitations. In so doing, however, we do not intend to convey an impression one way or the other regarding the appropriateness, absent the statute of limitations, of a misrepresentation claim of this nature.

Issue of material fact--fraudulent concealment

For his first point...